Professional services
Law Practice Profit Calculator
Works practice profit, where in a small practice the owner's own time is the largest hidden cost.
Result
Gross profit is what is left after the cost of doing the job. Overhead comes out of that: the building, the office wages, the vans, insurance, software and advertising. A healthy gross margin still loses money if overhead is larger.
Get a Free Business AuditHow the calculation works
Collected revenue less direct costs less overhead gives profit and margin. In a solo or small practice the owner is both the principal timekeeper and the manager, and the management half produces no billable hours while consuming most of the week's non-billable time, which is why the honest version of this calculation puts a wage for the owner's working time above the line.
What moves the number
- A market wage for the owner's own billable and management work.
- Collected revenue rather than billings.
- Overhead, which is a larger share in a small practice.
- Whether support staff free up billable time.
Where this one goes wrong
A solo practice showing profit while paying the owner nothing is reporting unpaid labour, and the distinction decides whether the practice is worth more than employment elsewhere. The second thing to watch in a small practice is that overhead per attorney is higher than in a larger firm because the fixed base does not scale down, which means a solo needs a higher effective rate or better utilisation to reach the same margin, not a lower one.
Before you quote
- Pay the owner for both billable and management time.
- Use collected revenue, not billed.
- Compare overhead per attorney against larger-firm expectations.
Questions
About this calculator
Is my solo practice profitable?
Only if it pays you a market wage for both the billable and the management work before the remainder is called profit. Without that, the figure is unpaid labour and it cannot tell you whether the practice beats employment elsewhere.
Why is overhead worse in a small practice?
Because the fixed base does not scale down proportionately: premises, insurance, research subscriptions and practice management cost nearly as much for one attorney as for three. A solo therefore needs better utilisation or a higher effective rate to reach the same margin.
Does hiring support staff improve profit?
It can, where the time freed is converted into billable hours rather than absorbed. The test is whether billable hours actually rise by more than the burdened cost, and tracking that before and after the hire is what settles it.
The formula
gross profit = revenue - direct costs
Put this calculator on your site
Free to embed. Paste this where you want it to appear. It stays up to date automatically because it loads from BDEVY.
Please keep the attribution line. It is the only thing we ask in return.
How to use this calculator
- Revenue ($). Enter your own figure; the page starts at $68,000.
- Direct labour ($). Enter your own figure; the page starts at $16,000.
- Disbursements and expert fees ($). Enter your own figure; the page starts at $11,000.
- Other direct costs ($). Enter your own figure; the page starts at $2,200.
The result updates as you type, so you can try a figure, see what it does to gross profit, and change it back. Nothing you enter is sent anywhere or saved.
A worked example
These are the figures the calculator opens with. Every number in the results column below is produced by the same calculation the page runs, so you can follow it through before putting your own figures in.
What goes in
| Input | Value |
|---|---|
| Revenue | $68,000 |
| Direct labour | $16,000 |
| Disbursements and expert fees | $11,000 |
| Other direct costs | $2,200 |
What comes out
| Result | Value |
|---|---|
| Gross profit main result | $38,800 |
| Gross margin | 57.1% |
| Total direct cost | $29,200 |
| Profit per working day | $1,764 |
That is $38,800 at a 57.1% margin, about $1,764 for every working day. Overhead still has to come out of it.
How sensitive the answer is
Holding everything else steady and changing only revenue, this is what happens to gross profit. It is worth knowing which of your inputs the answer actually hinges on, and which barely move it.
| Revenue ($) | Gross profit |
|---|---|
| $34,000 | $4,800 |
| $51,000 | $21,800 |
| $68,000 example above | $38,800 |
| $102,000 | $72,800 |
| $136,000 | $106,800 |
Every other input is held at the example value while this one changes, which is not how a real job behaves. Treat it as a guide to which number matters most, not as five separate quotes.
What each figure means
- Revenue ($)
- A money amount, starting at $68,000.
- Direct labour ($)
- A money amount, starting at $16,000.
- Disbursements and expert fees ($)
- A money amount, starting at $11,000.
- Other direct costs ($)
- A money amount, starting at $2,200.
What the results tell you
| Result | What it is |
|---|---|
| Gross profit | The headline result. A money figure. |
| Gross margin | A percentage. |
| Total direct cost | A money figure. |
| Profit per working day | A money figure. |
Estimating is the easy part
The jobs you never hear about cost more than the ones you mis-measure. BDEVY builds the marketing, systems and automation that bring them in.